Generally Accepted Accounting Principles (GAAP)

Guidelines are set so we don’t risk making mistakes or assumptions. One important accounting guideline startups should follow is the Generally Accepted Accounting Principles, or GAAP for short. 

The Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB) created GAAP to ensure all companies follow the same reporting standards. 

Today, GAAP is only required for public, U.S.-based companies, but it is recommended to follow it from day one. Why? These standards ensure your financial reporting stays consistent, accurate, and transparent, making it easier for investors to review your financial health.